Bengal Govt, CPI(M) still divided on SEZ issue

What the CPI(M) proposes, the Left Front-ruled West Bengal may not necessarily agree to, especially if the issue is that of SEZs, reports Sutirtho Patranobis.

indiaUpdated: Jan 15, 2007 23:05 IST

Sutirtho Patranobis

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What the CPI(M) central leadership proposes, the Left Front-ruled West Bengal may not necessarily agree to, especially if the issue is that of Special Economic Zones (SEZs).

In a glossy book titled 'Doing Business in West Bengal', which the state government distributed among NRI investors at the Pravasi Bharatiya Divas held recently, it has promised the same benefits to potential SEZ investors that the CPI(M) has repeatedly asked the Centre, citing huge financial losses, to withdraw or amend.

In the book, benefits on SEZs are given under various categories like 'benefits to developer', 'benefits to units set up in SEZs', and 'certain key benefits in West Bengal for SEZ units'.

One of the main sops being handed out by the West Bengal government - staunchly opposed by the CPI(M) in notes submitted to the UPA government - is the "100 per cent exemption on profits and gains for 10 consecutive years out of a block of 15 years."

In the note submitted to the UPA, the CPI(M) had said that tax holidays would result "in a revenue loss of Rs 1,75,487 crore against an estimated investment of Rs 3,60,000 crore. The justifiability of the tax largesse to big business under the SEZ policy needs to be thoroughly debated."

The Bengal government has also promised service tax exemption to both the service provider and the developer in an SEZ. The CPI(M) note was against this too. "These policies will simply encourage investors, including those in financial services, to move away from other locations in India to SEZ areas with no benefit to the economy and substantial revenue loss."

While the state government has promised to declare all SEZ units as 'public utility services', the note said that this means a deviation from the SEZ Act.

The state government has also said that it would designate the "development commissioner to be the reconciliation officer for labour disputes in SEZ."

According to the CPIM note, "The ILO recommendation regarding separation of powers between the development commissioner of the export processing zone and the grievance redressal officer should be seriously considered in this regard."

When contacted, CPI(M) general secretary Prakash Karat said, "The Act (SEZ Act and Rules) is a Central act. So the state government is following the act. We have asked for amendments."

At present, besides three functioning SEZs, two are being approved. Five more have been approved, four are being contemplated and approval for eight more have been in-principle obtained.